Closely Held Family Business Disputes

Businesses that wish to benefit from a corporate structure, but who also want to keep matters in the family, may opt to form a closely-held family corporation or limited liability company (LLC). This offers certain advantages in areas like liability, and it allows family businesses to keep business matters private. Disputes that arise between owners or officers in such a business, however, have an extra dimension–the family relationship–not always found in business disputes. This could offer an incentive to work towards a mutually agreeable resolution, but it could also further complicate matters. In situations such as these, a Chicago family business dispute lawyer with experience in dispute resolution, such as mediation and arbitration, can advise a party of their rights, their obligations to the business and to the family members, and various methods of resolving the dispute.

Closely-Held Family Businesses

Closely-held businesses include a small number of shareholders or members. Some states impose restrictions on the sale of shares in a closely-held corporation, requiring a departing shareholder to sell them back to the company. In a closely-held family business, the shareholders or members typically have a family relationship, and the company’s operating rules might require that ownership of the company remain within the family.

Closely-Held Family Business Disputes

Disputes among family members may include:

  • Minority shareholders’ rights;
  • Management or governance disputes;
  • Disputes over compensation or dividends;
  • Disputes arising during business succession planning;
  • Disputes arising out of the divorce of a shareholder or member;
  • Bankruptcy or insolvency;
  • Employment disputes;
  • Real estate purchases or sales;
  • Admission of additional shareholders or members; or
  • Issuance of stock or other equity.
Dispute Resolution for Closely-Held Family Businesses

Unlike other businesses, members or shareholders in a closely-held family business might not be able to divest and walk away from the company. Family businesses should therefore consider all available methods of dispute resolution, up to and including litigation, with the goal of preserving family unity, if not harmony. The arbitration process allows parties to a dispute to present their claims to a neutral arbitrator who acts as a sort of private judge. Mediation involves a neutral mediator who facilitates negotiation between the parties with the goal of finding a mutually agreeable settlement. Based in Chicago, our team of family business dispute attorneys includes several trained and certified arbitrators and mediators. These methods of dispute resolution have the additional benefit of being outside of the court system, meaning that all issues remain private.

Litigation Between Owners of Closely-Held Family Businesses

When parties to a closely-held family business dispute cannot resolve their disagreements privately, we can assist with the litigation process. This has the advantage of offering finality, as a court’s order has the full force of law. The process can be lengthy and expensive, however, and can expose the family business dispute to publicity, as court files are usually public record.

The Chicago family business dispute attorneys of Lubin Austermuehle, P.C. have practiced business law in the greater Chicago area and DuPage County, as well as elsewhere in Illinois, Indiana and Wisconsin, for more than twenty-five years. Contact us today via email, at 630-333-0333 to schedule a consultation with a family business dispute lawyer in Chicago or Elmhurst, Illinois.

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"I was referred to Peter Lubin from someone in the car business to handle a law suit. From the moment I made the appointment Peter and his staff were outstanding. This wasn't an easy case, most lawyers had turned me down. However, Peter took the time to meet with me and review everything. He took on the case, and constantly communicated with me about updates and case information. We beat this non-compete agreement case in record time. I would use him again and recommend him to my closest family and friends. 5 stars is not enough to thank him for his service." Sebastian R.
"I worked on two occasions with Peter Lubin and his staff. They took their time with me and discussed each and every item in detail. The group makes you feel like you are part of the family and not just another hourly charge. I recommend Peter to anyone who asks me for a referral. If you are looking for a top notch attorney at a reasonable rate, look no further than Lubin Austermuehle." Kurt A.
"Excellent law firm. My case was a complicated arbitration dispute from another state. Was handled with utmost professionalism and decency. Mr. Peter Lubin was able to successfully resolve the case on my behalf and got me a very favorable settlement. Would recommend to anyone looking for a serious law firm. Great staff and great lawyers!" Albey L.
"I have known Peter Lubin for over 30 years. He has represented me on occasion with sound legal advice. He is a shrewd and tough negotiator leading to positive outcomes and averting prolonged legal hassles in court. He comes from a family with a legal pedigree and deep roots in Chicago's top legal community. You want him on your case. You need him on your opponents case. He won't stop fighting until he wins." Christopher G.
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"Peter was really nice and helpful when I came to him with an initial question about a non-compete. Would definitely reach out again, recommended to everyone." Johannes B.